The Municipal Finance Management Act is a potential lever for citizens. High court action targeting the municipal manager or other leaders will send a message that mismanagement is not acceptable.
The recent auditor general’s report on municipal audits is sobering reading. Only 41 out of 257 municipalities achieved clean audits. Of the remaining 216, a total of 100 have unqualified audits with findings, 33 have been placed under administration and 25 have disclaimers, meaning that material facts needed to complete the audit were missing.
Worst of all, a number have not even been audited because their municipal managers have not submitted financial statements.
It is sad that these numbers are not improving — some do better than the previous report, others worse.
It’s not as if there are no mechanisms to turn this around. Running a municipality is not rocket science — it is nowhere near as complex as a large state-owned entity such as Eskom or SAA. If a few basic processes are in place such as requiring that a payment for goods be matched with a delivery note, that all purchases be justified by a budget item and that use of equipment and unplannable expenses like overtime be monitored and controlled, many problems would be eliminated.
Basic oversight of tenders and appointments, particularly to senior positions should not be hard. Transparent processes should ensure that these things are correct.
So what is going wrong?
Dysfunctional councils thwart oversight by tactics such as releasing council agendas as close as possible to the meeting time — sometimes even adding critical information after the meeting has started. Doing so subverts the purpose of notice; a properly-called meeting should include not only the date and time in its initial notice but also all relevant information.
Another factor is that the government is not using all its levers of power to call dysfunctional municipalities to order. That more than 10% have been placed under administration is damning enough, but why hasn’t this measure also been applied to all those that are demonstrably failing? More critically, why does placing a municipality under administration not result in sustained improvement?
Part of the problem is the war for control of the ANC. Neither side in the two major factions clearly has the upper hand. And neither is clean. Social media keeps erupting in battles that amount to “Our crooks are better than their crooks.” How is this supposed to have any appeal? But more relevant for the current topic, if both factions are compromised, who is to wield the law to undo capture of municipal government?
First, let’s review the law and then consider alternatives.
The Constitution covers a wide range of intervention powers by provincial governments in section 139, including 139(1)(c), which provides for dissolution of a council and placing it under administration; 139(1)(b) provides for a province to take over a function of a municipality;. 139(4) is the most stern and requires dissolution for a municipality that cannot perform a constitutional duty, including passing a budget and 139(5) provides for a province to impose a financial recovery plan.
So the Constitution already provides mechanisms that ought to be more than adequate for turning around a failed municipality. While none of these steps can be applied arbitrarily and the processes adopted can be contested in court, there is no reason in principle that a failed municipality cannot be turned around.
What of legislation?
Section 5 of the Public Audit Amendment Act of 2018 (PAAA) requires the auditor general to initiate a process of recovery of the cost of a material irregularity from an accounting officer (the municipal manager in the case of a municipality). The wording is very strong. The word “must” appears several times, indicating that this is not at all discretionary. The Municipal Finance Management Act (MFMA), 2003 in section 32 already provided for political office bearers or officials to be personally liable for unauthorised, fruitless, wasteful or irregular expenditure of which they are aware if they took no action to counter this.
One of the tricks for evading all this is to fail to keep records. But it is a good argument that a lack of records, far from making accountability impossible, is itself prima facie evidence of wrongdoing.
It is instructive to compare the PAAA with the MFMA. The MFMA states only that an official or politician who is responsible for this sort of financial irregularity is liable for the costs. The PAAA, on the other hand, provides for reporting a certificate of liability to the relevant legislature (provincial government in the case of a municipality). So you could well ask: what good will that do, since the provinces already are empowered under the constitution to intervene in various ways in a failing municipality — yet we have all this failure?
The biggest failure is not in the Constitution, legislation or the auditor general’s office. It is in the provincial governments, which are far too inactive in remedying the problems of service delivery and infrastructure failure.
So what is the remedy? What can civil society activists do?
There have been numerous lawsuits tackling symptoms. Here in Makana, we have had lawsuits that attempted to force compliance in managing the municipal landfill site, enforcing a settlement between Eskom and the municipality, fixing sewer leaks and illegal dump sites, among others. You can find numerous examples around the country — residents who have taken over running their water treatment plant, who have demanded provincial interventions in local government and so on.
I argue for going for the source rather than the symptoms. The auditor general’s amended powers are a great step. But it is a slow process as the accounting officer has to be afforded an opportunity to respond and this could lead to fixing this specific issue but not the broader issue. Also, such issues are only going to be exposed when an annual audit occurs.
As we have learnt in Makana, a broad, sweeping assault is not necessarily the best idea; a sharp focused attack is better. For example, community activists won a comprehensive court victory over the mismanaged landfill site but it took years of threats of contempt to implement it. The municipality could fix a small range of issues whenever there was a threat of contempt, then stop bothering when the threat went away.
The MFMA provides a potential lever for citizen power because it is not specific about how cost recovery can occur. I would be interested in seeing activist public-service lawyers exploring this option. As soon as it becomes obvious that money is going missing or being misspent, a high court action targeting the municipal manager or other relevant leadership could be a useful way of concentrating their mind on doing their jobs. Because this would not have to wait for a slow cyclic process such as an annual audit, it would have a much quicker turnaround. Once the precedent was set, it would send a strong message for others misspending or failing to account for spending on a regular basis.
The MFMA is not specific about where recovered costs should go; the obvious place is to the government. But it could be interesting to try to win a case where the recovered costs had to go to a local organisation to remedy a municipal failure.
Until public officials and politicians start feeling pain in their own back pockets, nothing will change — no amount of protest, petitions or politics seems to work. We have to try something different. If it is not this, then let’s hear other ideas.
Philip Machanick is interim vice-chairperson of the Makana Citizens Front.
The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.